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Local property investors are turning their attention from residential to suburban Sydney leased commercial and retail properties, according to a leading commercial real estate network.

Gunning principal Malcolm Gunning said “traditional assets” have been a strong focus for local investors after the banks increased residential investment interest rates in the middle of last year.

“These are not the fancy properties you see in the property sections, they are solid commercial and retail properties that give good return on investment,” Gunning said.

“We believe local investors are now moving away from residential properties and are seeking suburban commercial and retail investments which have good returns with development upside, resulting from the Baird Government's changes to zoning for many of the established suburban retail strips.”

These strips, says Gunning, are often in close proximity to the new improved public transport hubs and achieve strong yields.

“Buyers are looking for properties with a 4 per cent yield and potential growth,” he said.

“A property we currently have listed for auction, 264 Kingsgrove Road, Kingsgrove, which is leased by House Essentials, has seen more than 100 enquiries during the campaign.

“We believe properties like this will continue to see a lot of attention throughout 2016 and believe this is a direct flow on from the changes to zoning and banks preference to lending more to commercial investors in particular for property within Sydney's 20km ring.”